3270-10-PE A.G. Simpson Automotive Inc., Applicant.
BEFORE: Patrick Kelly, Vice-Chair, Pauline Seville and Paul LeMay, Members.
APPEARANCES: Carolyn Kay, George Dendias, Lisa Boulton, Dave McCulloch and Joanne Branchaud appearing on behalf of the applicant.
DECISION OF THE TRIBUNAL: June 16 , 2011
Background
This is an employer application under the Pay Equity Act, R.S.O. 1990, c. P.7 as amended (“the Act”) in respect of two Orders of a Review Officer, one dated May 21, 2010 and the other dated October 27, 2010, regarding the employer’s non-union pay equity plan. The May 21, 2010 Order required, among other things, that the applicant (or “AGS”) develop and post a non-union pay equity plan by no later than September 10, 2010. The applicant endeavoured to do so, and submitted a proposed pay equity plan to the Review Officer. The Review Officer raised several concerns in respect of which AGS sought legal advice. The applicant then developed a revised non-union pay equity plan, covering approximately 190 employees in 170 job classes, 53 of which are female dominated job classes. The development of that revised plan prompted the Review Officer to issue the October 27, 2010 order requiring the applicant, among other things, to search for bargaining unit male comparators for non-union female job classes. The applicant asks that the Orders be varied.
Although the applicant provided notice of this application to all affected employees, no employee filed a response. The Pay Equity Office was also served with the application, but it too did not participate in the matter. Consequently, at the hearing of May 4, 2011, we heard only the applicant’s evidence and submissions.
The Facts
Joanne Branchaud, the applicant’s Corporate Manager, Payroll and Benefits, testified for AGS, as did George Dendias, the applicant’s Director of Human Resources. The evidence called by AGS established the following.
The applicant is a private sector employer, manufacturing and supplying automotive impact system assemblies/modules and body-in-white structural modules. It has four manufacturing plants in Ontario: Windsor, Cambridge, Scarborough and Oshawa. Its Canadian head office is located in Scarborough, Ontario.
AGS posted a pay equity plan for its non-union employees in 1990. The Employer's records would indicate that at the time of the posting no objections were filed with respect to the non-union plan. In 2007, the applicant negotiated an additional pay equity plan with the Canadian Automobile Workers, the bargaining agent for a bargaining unit of approximately 845 employees.
In 2002, AGS was sold to J2 Management Corp. The enterprise continued to carry on business as A.G. Simpson Automotive Inc.
In 2004, as part of the Pay Equity Commission's Monitoring Program, the Pay Equity Office contacted AGS to determine whether it had complied with the Act. After a copy of the applicant's non-union plan was provided to the Commission, a number of issues were identified by the Review Officer assigned to the file. A series of meetings and discussions were held with the Review Officer in 2006 and 2007. As a result of significant restructuring and reorganization that occurred following the sale of AGS to J2 Management Corp., the Review Officer advised the applicant of the requirement to develop a revised non-union pay equity plan effective December 15, 2002.
The applicant considered retaining a consultant to undertake the job evaluation exercise in the development of the revised plan. Ultimately, however, the applicant made the decision to undertake the exercise internally using its own resources.
The evaluation of non-union benchmark jobs was delayed for a period of roughly 18 months as a result of the medical leave of absence of the applicant's lead on the project. However, in March 2010 the project was renewed. As we have indicated, in May 2010, the Review Officer issued her first Order requiring AGS to develop and post a non-union pay equity plan no later than September 10, 2010. Pursuant to that Order the applicant completed the evaluation of all job classes using a gender neutral comparison system recommended generally to employers by the Pay Equity Commission.
In anticipation of the September 10th deadline, AGS sent the Review Officer a proposed non-union pay equity plan on September 8, 2010 via email from Mr. David McCulloch, Corporate Manager of Human Resources. That plan indicated that job classes of equal or comparable value were determined by dividing the system into point bands, 50 points wide. The actual hierarchy of job class ratings was not provided to the Review Officer. The proposed plan identified the female job classes and their respective male comparators. Three female job classes, the Coordinator, Human Resources; Occupational Nurse and Technician; and Laboratory were identified as being entitled to a pay equity adjustment. Furthermore, the proposed plan indicated that the proportional value comparison method had been applied to five female job classes that could not achieve pay equity using the job-to-job method. The proportional value methodology determined that no adjustments were owed to those job classes.
In response, the Review Officer indicated that she had two concerns with respect to the proposed plan: the first with the description and implementation of the posting process and the second with the use of the proportional value method of comparison. In her email to Mr. McCulloch, the Review Officer stated as follows:
“with respect to the female job classes which were compared using the proportional value method of comparison, I just wanted to ensure that you looked THROUGHOUT THE ESTABLISHMENT (i.e. into bargaining unit jobs) for potential male comparators. The Act requires that that sequence of search be exhausted before proportional value comparisons can be undertaken. Would you please confirm that this step has been taken and send me the job evaluation results for the five unmatched female job classes, as well as those for the bargaining unit jobs.”
In response, the applicant revised the proposed pay equity plan and forwarded it along with the requested evaluations by email dated September 9, 2010 at 9:44 a.m. The Review Officer then had a conversation with Mr. McCulloch wherein she referenced the sequence of search which she had earlier identified, but also raised the concept of “lower valued higher paid” male comparators, an issue that the applicant had not previously encountered. The Review Officer followed up her conversation with Mr. McCulloch in a further email dated September 9, 2010 at 2:27 p.m. saying she hoped that matters had been clarified, and requesting the applicant to provide not only current, but also 2002, job rates for certain identified job classes. Upon receipt of that email, Mr. McCulloch contacted his superiors outlining the advice he had received from the Review Officer, and questioned why she was looking for rate information and raising the issue of using bargaining unit male comparators. In his email Mr. McCulloch also raised the prospect of using 150 point bands which would have no impact on the three female job classes already identified as requiring a pay equity adjustment under the proposed Plan. The applicant then sought legal advice in order to determine what precisely its obligations were pursuant to the Act.
On September 13, 2010, counsel for AGS emailed the Review Officer, advising that she would be meeting with the employer the following week to “review their pay equity” and “to go over the background”. On September 27, 2010, counsel for AGS emailed the Review Officer indicating that she had posed a series of questions to the applicant which it had not previously considered. In particular, counsel advised the Review Officer that she had asked the applicant “how they had determined gender dominance”, “why they were using 50 point bands given the range of scores and the number of resultant bands”, “why they were using union male comparators when they did not have to (depending on the banding methodology used)?”. Counsel further indicated that the applicant would undertake further analysis and review the results with counsel.
No response was received from the Review Officer. Rather, on October 27, 2010 the applicant received the Review Officer's second Order in this matter. Among other things, the Review Officer stated in the second Order:
I am left to conclude that the Employer's true concerns about posting a plan according to my direction have everything to do with its reluctance to incur the costs associated with remedying systemic discrimination in compensation for some of its female job classes, and nothing to do with concerns about whether it has a) properly determined the gender predominance of all jobs, or b) selected an appropriate banding methodology or gender dominance.
Analysis
The non-union pay equity plan developed by the applicant which it wishes to post in the workplace contains a hierarchy of job evaluation ratings ranging from 495 to 1624 points. All the job classes are arranged within 150-point bands for a total of nine bands. Each band contains at least one non-union male comparator. The highest band in the hierarchy contains only two job classes (one female, one male), and the second highest band contains only one job class (male). None of the bands below contains fewer than five job classes. The three female job classes which were identified for pay equity adjustments under the employer’s previously proposed 50-point band plan will still receive the same adjustments under the 150-point band plan. In fact, under the 150-point band plan, four additional female job classes are entitled to pay equity adjustments, thus increasing the applicant's cost of achieving/maintaining pay equity to over thirty times the original cost under the fifty-point band draft plan. By comparison, the fifty-point band plan generated a total of nineteen pay equity bands, five of which had only one or two job classes within them. In addition, the fifty-point band pay equity plan resulted in five female job classes without non-union male comparators.
Using unionized male comparators for non-union female job classes raises a number of complications for the applicant arising from differences in benefits and pension and other forms of compensation between the unionized and non-unionized employees, as well as different effective dates for unionized general wage increases as compared to non-union. For example, the unionized employees have a defined benefit pension plan, whereas the non-union employees are covered by an RRSP plan. The unionized employees are entitled to cost-of-living adjustments in appropriate circumstances, up to four times annually. The non-union employees are not. Aside from these differences, if the wage rates of unionized male comparators are incorporated into the non-union pay equity plan, there is the potential for “compression” of the compensation of some non-union job classes, leading to an irrational non-union wage structure in which higher valued job classes earn less compensation than lower valued job classes. These factors, and others, were taken into account by the applicant in reaching the decision to develop a 150-point band pay equity plan with each band containing at least one non-union male job comparator, thus avoiding the necessity to search for unionized male comparators.
There are no fixed rules concerning methods of job class comparison, including banding methodology, in pay equity plans. In terms of how job classes of comparable value are to be identified, the Act itself is silent. Various banding methodologies may satisfy the requirements of the Act: fixed point bands, variable point bands, floating bands based on percentages, for example. In the context of a non-union pay equity plan, the banding methodology to be adopted is the decision of the employer. The chosen methodology need not be the one that ensures adjustments for the greatest number of female job classes. Employers are entitled to exercise their discretion in that regard, so long as they do so reasonably and consistently with the purposes and intent of the Act.
In this case, the applicant preferred the 150-point banding scenario over the 50-point banding because the latter plan was more problematic on a number of fronts. What is clear is that the applicant was not motivated by any unlawful considerations such as a desire to avoid its obligations under the Act. It wanted a non-union pay equity plan that makes sense in terms of the applicant’s compensation structures, and that can be relatively easily maintained. The 150-point banding, in its view, achieves that end without violating the Act. In fact, it casts a wider net than the 50-point band plan, capturing more than double the number of female job classes entitled to pay equity adjustments. Certainly, in light of the evidence adduced before us, the applicant cannot be accused of gerrymandering the pay equity plan in order to avoid or reduce the implementation costs. Furthermore, there was no evidence before the Tribunal to suggest that the banding method determined by the applicant is not consistent with the objects of the Act.
For these reasons, the Orders issued by the Review Officer ought to be varied.
Disposition
The Order dated May 21, 2010 required the applicant to prepare, post and implement a pay equity plan by following certain steps according to a specific timetable. The applicant has achieved some of those steps, and for those that have not yet been achieved, such as the posting of the amended pay equity plan and appropriate notices, the timetable is no longer relevant. The Order dated October 27, 2010 ordered the applicant essentially to post its 50-point band non-union plan and incorporate within it a search for union male job comparators for specified female job classes. Accordingly, the applicant is relieved of those obligations and instead is hereby ordered forthwith to post in the workplace in accordance with the posting and review provisions of the Act the non-union pay equity plan at Tab 12 of the Book of Documents of the Applicant provided to the Tribunal at the hearing on May 4, 2011. Furthermore, the applicant is ordered to comply with all other provisions of the Act with respect to the posting of statutory notices in the workplace and, provided there are no objections by employees to the non-union pay equity plan, to comply with the Act in respect to the implementation of any adjustments under the plan.
We decline to make any further observations or findings, other than those herein contained, regarding whether or not the applicant’s non-union pay equity plan achieves pay equity or otherwise complies with the Act.
“Patrick Kelly”
Patrick Kelly, Vice-Chair
“Pauline Seville”
Pauline Seville, Member
“Paul LeMay”
Paul LeMay, Member```